Consumer prices rose for the third straight month in June, driven mainly by rising fuel and food prices.
The Commerce Ministry reported yesterday that consumer prices based on 450 products and services edged up 0.38% year-on-year last month, easing from a 0.46% gain in May, which was a 17-month high, and a 0.07% increase in April.
Somkiat Triratpan, director of the ministry's Office of Trade Policy and Strategy, said June's consumer prices were affected by the excise tax hike on tobacco and alcohol, rising 13.07% year-on-year.
The cabinet agreed to the cigarette excise tax on Feb 9. The higher tax is projected to add 12 billion baht in revenue this fiscal year and 15 billion annually in subsequent years. Fresh vegetables, fruit, livestock and food prices also increased thanks to lower supplies, caused by widespread drought.
Core inflation, which excludes food and energy prices, was 0.8% on an annual basis in June and 0.08% on a month-to-month basis.
Energy prices remained low, causing overall prices to contract by 0.09% in the first six months. Core inflation was 0.73% year-on-year for the period.
Mr Somkiat said the ministry expects consumer prices would increase sharply from the third quarter onward as a result of the government's economic stimulus measures and tourism promotion campaigns.
The ministry projects inflation of 1% in the third quarter and 2% in the fourth quarter, following -0.5% in the first quarter and 0.3% in the second quarter.
It is maintaining its 2016 inflation forecast at 0-1% based on expected economic growth of 2.8-3.8%, assuming Dubai crude oil prices of US$30-40 a barrel and a foreign exchange rate of 36-38 baht to the US dollar.
Mr Somkiat said the ministry is scheduled to revise its inflation target next month when global oil prices are expected to provide a clearer outlook.
Earlier in May, the government's planning unit, the National Economic and Social Development Board, increased its projection for inflation in 2016 to 0.1-0.6% from a contraction of 0.9-0.1%.
Thanavath Phonvichai, vice-president for research at the University of the Thai Chamber of Commerce, said a slower pace of inflation in June was largely because of lower food prices as well as easing drought conditions.
He said a gradual increase in core inflation also reflected a mild recovery in the Thai economy, and from this point inflation is likely to increase further.